In a significant ruling titled Assistant Commissioner of Income Tax (International Taxation) & Others vs. Shelf Drilling Ron Tappmeyer Ltd. & Others, the Supreme Court of India addressed the interplay between Section 144C and Section 153 of the Income Tax Act, 1961. The issue revolved around whether reassessment proceedings involving the Dispute Resolution Panel (DRP) must adhere to the strict limitation period under Section 153, or if Section 144C allows an extended timeline.
Background of the Case
The case involved multiple non-resident assessees engaged in the shallow water drilling business, eligible under Section 44BB of the Act. The dispute stemmed from reassessment orders following the Income Tax Appellate Tribunal’s remand.
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- In the assessment year 2014-15, the assessees declared losses, which later became subject to reassessment.
- The final assessment order was passed after remand on 28.09.2021, but challenged as time-barred under Section 153(3) read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA).
"The final assessment order could not be passed as the limitation expired on 30.09.2021." – Respondent’s submission
Whether the timeline under Section 144C (which governs assessments involving the DRP) can extend or override the limitation set by Section 153(3) in reassessment scenarios.
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The judgment saw a difference of opinion between Justice Nagarathna and Justice Satish Chandra Sharma.
Justice Nagarathna’s View (Minority Opinion)
- Held that Section 144C does not override Section 153(3).
- All procedures, including the draft assessment and DRP directions, must fit within the 12-month limitation under Section 153(3).
- If Parliament intended extra time for 144C procedures, it would have provided express language in the statute.
"The procedure contemplated under Section 144C has to be within the timeframe prescribed under Section 153(3)." – Justice Nagarathna
She dismissed the Revenue’s appeal, upholding the High Court’s view that the reassessment order was barred by limitation.
Justice Satish Chandra Sharma’s View (Majority Opinion)
- Took a contrasting stance, allowing the Revenue’s appeal.
- Held that Section 144C timelines operate independently and must be viewed in addition to the 12-month period under Section 153(3).
- Emphasized the importance of giving the Department adequate time to follow the DRP procedure without curtailing timelines.
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"If the entire Section 144C procedure is squeezed into Section 153(3), it would result in a complete catastrophe for recovering lost tax." – Justice S.C. Sharma
He concluded that draft assessment orders must be passed within the 153(3) limit, but final orders after DRP directions are governed by Section 144C’s own deadlines, even if it means going beyond the 12-month limit.
The Bombay and Madras High Courts had earlier held that all DRP-related proceedings must be concluded within Section 153’s timeframe, but the Supreme Court overruled these judgments.
- Section 144C(13): Final order after DRP direction must be passed within one month.
- Section 153(3): Fresh assessment after remand must be passed within 12 months from end of FY.
- TOLA 2020: Extended some timelines due to COVID-19 disruptions.
This ruling ensures the Assessing Officer gets sufficient time to complete DRP proceedings, even in remand cases, without being constrained by the 12-month outer limit under Section 153(3).
It provides clarity to international assessees, tax practitioners, and assessing officers regarding how timelines operate when Section 144C comes into play after Tribunal remands.
Case Title: Assistant Commissioner of Income Tax (International Taxation) & Others vs. Shelf Drilling Ron Tappmeyer Ltd. & Others
Judgment Date: 2025 (Citation: 2025 INSC 946)
